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COSL offers $2.5b to buy Norway firm

By Wan Zhihong (China Daily)
Updated: 2008-07-08 10:07

An engineer from COSL works at a jack-up oil rig in Dalian, Liaoning province. [Agencies]

China Oilfield Services Ltd (COSL) yesterday decided to offer 12.7 billion kroner ($2.5 billion) to buy Norwegian company Awilco Offshore ASA (AWO), in a move to create the world's eighth largest rig fleet.

COSL will offer 85 kroner a share in cash for the Norwegian firm, said a company statement yesterday. The offer represents a premium of 18.7 percent over the closing price of AWO shares on July 4.

"AWO's modern high-specification rigs and cutting-edge technology for offshore drilling is a good strategic fit for COSL pursuant to its globalization and growth strategies," said the company statement.

The combination of COSL and AWO would create the world's eighth largest rig fleet, consisting of 34 operated rigs (including rigs under construction) with operation and growth opportunities in most major international markets.

AWO is an international offshore drilling contractor owning and operating five jack-up drilling rigs and two accommodation units. Another three jack-up drilling rigs and three semi-submersible drilling rigs are under construction. AWO also has the option of constructing two semi-submersible drilling rigs.

COSL operates 15 drilling rigs, including 11 jack-ups and three semi-submersibles while operating one leased jack-up rig. In addition, COSL owns and operates the largest and most diverse offshore fleet in China, including 75 support vessels and four oil tankers, five chemical tankers, eight seismic vessels and four geotech survey vessels.

It also has a vast array of modern facilities and equipment for logging, drilling fluids, directional drilling, cementing, well completion and well work-over services.

The company is seeking assets in Southeast Asia, the Middle East, Africa, North America and Russia, Chief Financial Officer Zhong Hua said in June.

China, the world's second largest energy user, has stepped up its search for oil and gas at home and abroad to sustain its fast growth. CNOOC Ltd, COSL's largest customer, plans to increase capital spending by 44 percent this year to $5.2 billion to expand production.

COSL said first-quarter profit this year was 891.35 million yuan ($129.82 million), up 35.5 percent year-on-year, because of strong orders and cost cutting.

The company's profits were up 98 percent to 2.24 billion yuan in 2007 on rising business revenue, which rose 42 percent to 9.24 billion yuan last year. Revenue hit record high in four of its main businesses, including drilling, marine and transportation, oilfield technology and geophysical survey.